Deck 14: Analysis of Sales Volume

Question 1

Performance evaluation will become more important in the 2000s because of the emphasis on relationship selling.

Answer 1

True

Question 2

A firm's market share may be decreasing while its sales volume is increasing.

Answer 2

True

Question 3

A sales volume analysis ordinarily cannot be done without being accompanied by a marketing cost analysis.

Answer 3

False

Question 4

To be effective,evaluation should both follow and precede planning.That is,evaluation follows the planning for the current period and precedes and influences the planning for the next period.

Question 5

The evaluation process in marketing is a two-stage operation - find out what happened and why it happened.

Question 6

A basic reason for the 80-20 situation is that most marketing programs include some misdirected marketing effort.

Question 7

A product with a steadily declining sales volume should be dropped from a company's product line.

Question 8

Planning and performance evaluation are particularly interdependent in the management process - either of these activities is not worth much without the other.

Question 9

A marketing audit is a detailed analysis of current marketing situations and organization;this audit does not deal with future situations.

Question 10

A sales volume analysis plus a marketing cost analysis constitute a marketing profitability analysis.

Question 11

A company does not need to make a detailed sales volume analysis if its sales have been increasing over the past several years.

Question 12

A situation in which a large percentage of the customers accounts for a small percentage of the total volume is an example of the 80-20 principle.

Question 13

Misdirected marketing effort can result in high sales volume,yet low profit.

Question 14

A marketing audit is one part of a sales management audit.

Question 15

A decline in a firm's sales volume indicates that competition is getting a larger share of the market.

Question 16

Marketing efforts and costs in a company typically follow the number of marketing units (territories,products,etc. )rather than the actual potential volume and profit from these units.

Question 17

During the 90s,salespeople became less effective at retaining existing customers.

Question 18

Most organizations perform a complete marketing audit at least once a year.

Question 19

A sales volume analysis by customer groups ordinarily is not necessary if the company already has done a good job analyzing its sales volume by territories and products.

Question 20

A sales volume analysis is a study of the "net sales" section of a company's profit and loss statement.

Question 21

When evaluating a company's sales performance,management should:

A)Determine which marketing unit is weak and why it is weak,before recommending action to improve the situation.
B)Prepare a complete marketing audit.
C)Not make a sales volume analysis unless it is followed by a marketing cost analysis.
D)Investigate the 80-20 principle.
E)Not go into great detail as long as sales are increasing.

Question 22

During the 2000s,the evaluation process is likely to become more important because of:

A)The emphasis on relationship selling.
B)The emphasis on profitable sales.
C)The emphasis on transactional sales.
D)The trend toward international sales.
E)All of these.

Question 23

The evaluation stage in the marketing management process is not likely to include:

A)Estimating territorial sales potentials.
B)Matching the sales results against sales goals.
C)Analyzing marketing costs.
D)Preparing a sales volume analysis.
E)Appraising territorial sales performances.

Question 24

With respect to a marketing audit:

A)It is the practice of preventive as well as curative marketing medicine;that is,it analyzes past activities and aids in decision making for the future.
B)Management should conduct a full audit at least once a year.
C)It applies to the marketing activities but not to the sales activities in a company.
D)It is not a total evaluation program in the same sense as a financial or personnel audit.
E)None of these is correct.

Question 25

In the management process,as applied to a marketing program,the stage which involves analyzing performance results in relation to program objectives is called:

A)Administration.
B)Evaluation.
C)Communication.
D)Implementation.
E)Delegation.

Question 26

In the performance evaluation process,it is management's job to:

A)Find out what happens.
B)Find out why it happened.
C)Decide what to do about it.
D)Do all of these.
E)Do only two of A-B-C above.

Question 27

Together a sales-volume analysis and a marketing cost analysis constitute a:

A)Study of a company's operating (profit and loss)statement.
B)Marketing profitability analysis.
C)Marketing audit.
D)All of these.
E)Only two of A-B-C.

Question 28

In the past 20 years,salespeople have become:

A)More effective at finding new accounts.
B)Less effective at finding new accounts.
C)More effective at retaining existing customers.
D)Less effective at retaining existing accounts.
E)None of these.

Question 29

Among the following,sales performance evaluation is most closely related to:

A)Sales control.
B)Staffing the sales force.
C)Sales operation.
D)Marketing.
E)The marketing concept.

Question 30

In the management process,a marketing audit is most closely associated with the management function of:

A)Evaluation.
B)Planning.
C)Organizing.
D)Staffing.
E)Motivating.

Question 31

A total evaluation program in marketing is best described as:

A)The marketing concept.
B)A marketing audit.
C)The management process.
D)Marketing.
E)Management of the sales force.

Question 32

The management process of determining what happened,and what to do about it,is called:

A)Staffing.
B)Planning.
C)Evaluation.
D)Execution.
E)Accounting.

Question 33

Regarding the three stages of the management process (planning,implementation,evaluation),it is correct to say:

A)Evaluation normally is the next stage that follows planning.
B)Evaluation both follows and precedes planning.
C)If a company had to eliminate one stage,the first one to go would be implementation.
D)Without an evaluation system,a company cannot operate.
E)None of these is correct.

Question 34

Sales performance evaluation is least likely to include a:

A)Marketing cost analysis.
B)Sales volume analysis.
C)Setting quotas for the sales force.
D)Marketing audit.
E)Review (study)of performance of individual sales reps.

Question 35

The stage of sales performance evaluation in the marketing management process will most likely include:

A)Sales forecasting.
B)Setting sales quotas.
C)Determining market potentials.
D)Selecting salespeople.
E)Analyzing sales volume results.

Question 36

In the management process in a sales department:

A)Operational activities usually precede planning.
B)Planning tells us what really was done.
C)Planning and evaluation are interdependent activities.
D)Evaluation in this year's cycle is not related to any activities in next year's management process.
E)None of these is correct.

Question 37

In the management process,which of the following is both the last stage and the basis for some planning in future situations is:

A)Setting goals.
B)Organizing.
C)Staffing.
D)Evaluating results.
E)Operating.

Question 38

A systematic,comprehensive,periodic review and evaluation of the marketing activities in an organization is called:

A)A marketing information system.
B)The management process.
C)Marketing planning.
D)Marketing cost analysis.
E)A marketing audit.

Question 39

A marketing audit is:

A)A concept that includes in its scope a company's financial audit.
B)A systematic,comprehensive review of the marketing function in an organization.
C)The main activity in sales force planning.
D)A wrap-up of this period's operations,but does not affect next period's work.
E)None of these.

Question 40

A marketing audit:

A)Is a detailed study of a company's income statement.
B)Is a cursory examination to determine whether or not a company is customer-oriented.
C)Is a comprehensive review and evaluation of the marketing function in an organization.
D)Determines a company's relationship with its external environment.
E)Is None of these.

Question 41

Which of the following best illustrates the "80-20" principle?

A)Eighty percent of our products are sold in 80 percent of our territories.
B)Sales increased 15 percent last year.
C)Seventy-two percent of our customers account for only 12 percent of our sales.
D)Volume increased 80 percent,but profits increased only 20 percent.
E)Total sales increased 12 percent,but sales in the western region declined 3 percent.

Question 42

Which of the following is the best reason for continuing to carry a product when a sales volume analysis indicates it is a low-volume item?

A)The item is needed to round out the company's product line.
B)The product accounts for 5 percent of the sales volume and 2 percent of the profit.
C)The primary demand for the product is declining.
D)The product's gross margin is also low.
E)The product was what gave the company its start in life.

Question 43

When making a sales volume analysis by product line:

A)It is useful if industry sales figures are available for each of our product lines.
B)The 80-20 and the iceberg principles usually do not apply.
C)With respect to a given product,management should be satisfied if sales of that product are increasing as a share of company total sales.
D)Management should drop a product if its sales are below expectations.
E)Low-volume products should be dropped,especially if a cost analysis shows them to be a loss.

Question 44

Which of the following best illustrates the 80-20 principle?

A)We are a hardware wholesaler,and 20 percent of our sales volume comes from building supply dealers.
B)Fifteen percent of our customers account for 65 percent of our sales volume.
C)Industry sales declined 10 percent last year.
D)Our company's sales increased 18 percent last year.
E)Last year our volume was up 10 percent,but our market share declined 4 percent.

Question 45

The basic reason for the existence of the 80-20 situation in most marketing programs is:

A)The inevitable failure of many new products.
B)The high cost of marketing.
C)Misdirected marketing effort.
D)Too many salespeople.
E)None of these.

Question 46

The "80-20" principle exists in many companies because:

A)Marketing efforts and costs follow the number of territories,products,and customers,rather than actual sales or profit from these units.
B)Management does not evaluate the marketing performance.
C)All sales generate about the same rate of profit.
D)Most marketing executives are sales-oriented and not profit-oriented.
E)A company does not conduct a marketing cost analysis.

Question 47

In performance evaluation by sales managers,the soft-spot principle holds that:

A)A company should not get rid of a territory or product that is a soft spot.
B)It is more useful to measure soft spots on a percentage basis rather than dollar volume.
C)If a company does a good job in sales-volume analysis,it won't have any soft spots.
D)The principle is applicable only to a territorial volume analysis and not to a product or customer analysis.
E)An executive reaps the largest possible gain by working with the weakest segments of the organization.

Question 48

A detailed study of the "net sales" section of a company's profit and loss statement is called a ____________ analysis.

A)P & L
B)Sales volume
C)Marketing cost
D)Marketing audit
E)Historical

Question 49

When evaluating sales performance,a sales volume analysis alone is usually not sufficient because:

A)It does not take into consideration the territorial sales potentials.
B)It does not tell us whether the 80-20 principle is at work.
C)Sales forecasts are only estimates.
D)It does not indicate the profitability of sales territories or product lines.
E)None of these.

Question 50

Misdirected marketing effort occurs in many firms because:

A)The salespeople do not ordinarily make their quota.
B)Companies typically find that their sales forecasts are below the figure for sales potentials.
C)Companies do not earn a satisfactory return on investment.
D)Management lacks reliable standards for determining what results should be expected from marketing expenditures.
E)The opening statement is false in that mis-directed marketing effort does not occur in companies which show a good profit rate.

Question 51

Regarding a sales volume analysis by territory or product line:

A)They are not worth their cost if the sales are increasing year by year.
B)Below-par territories or products should be eliminated.
C)To make a useful analysis,management first should have set some sales goals or quotas by territory or product.
D)You cannot make this type of analysis without knowing territorial or product costs.
E)Market indexes are not used.

Question 52

In our company the figure for total sales is quite satisfactory,but it does not show that sales are declining in a certain product line or territory.This situation:

A)Is an example of the 80-20 principle.
B)Indicates a well-managed company.
C)Tells us that we did a poor job of sales forecasting.
D)Illustrates the need for detailed sales information.
E)Suggests that we drop that product or territory.

Question 53

Misdirected marketing effort occurs in many firms because:

A)Sales budgets are not prepared.
B)Management is profit-conscious rather than being volume-conscious.
C)Sales volume analyses cannot be done carefully.
D)Marketing and accounting executives do not sufficiently coordinate their efforts.
E)Management often lacks reliable standards for determining what should be spent on various marketing activities.

Question 54

When preparing a sales volume analysis by customer classification:

A)Management rarely finds the 80-20 principle in operation.
B)Customers can be classified by industry groups but not by channels of distribution.
C)This type of analysis is usually more fruitful when the customer groups are also analyzed by product line or territory.
D)Management should study its large accounts and not waste time and money on the small ones.
E)It is not useful to extend this analysis over several periods of time.

Question 55

Misdirected marketing effort:

A)Rarely occurs in a well-managed firm.
B)Is easy to detect.
C)Usually is corrected when a company conducts a sales volume analysis.
D)Means that a company should reduce its marketing activities.
E)Is a key reason underlying the existence of the 80-20 principle.

Question 56

Which of the following is an accurate generalization regarding a sales volume analysis?

A)It does not uncover which products are selling best.
B)It does not tell us whether the 80-20 principle is occurring in the firm.
C)It does not take into consideration the industry sales volume.
D)It indicates the contribution margin of territories.
E)None of these is correct.

Question 57

When a large percentage of our products or customers account for only a small share of our total sales or profit,we refer to this situation as:

A)The iceberg principle.
B)Sales-volume analysis.
C)Performance evaluation.
D)The 80-20 principle.
E)Marketing profitability analysis.

Question 58

If the Magenta Corporation were to assign one salesperson to each of its Pacific Coast territories,a substantial difference in the potential volume and profit from the various territories is likely to occur as a result of:

A)The SFA principle.
B)The high cost of marketing.
C)The mission statement.
D)Misdirected marketing effort.
E)The wheel of selling.

Question 59

Which of the following best illustrates the 80-20 principle?

A)Our company's sales increased 80 percent last year,but the industry's volume went up only 20 percent.
B)Sixty-eight percent of our customers account for only 12 percent of our sales.
C)Company volume increased 10 percent,but sales in territory A decreased 4 percent.
D)Eighty percent of our customers account for 80 percent of our sales;20 percent of our customers account for 20 percent of our sales.
E)Eighty percent of our territories usually are not profitable.

Question 60

A territorial sales volume analysis is likely to include all of the following steps,except for:

A)Establish a sales volume goal or quota for each territory.
B)Determine actual total sales in each territory.
C)Determine what percentage of total company sales should come from each territory.
D)Determine how much is the variation between the actual sales and the quota-goal figure.
E)Deduct territorial sales expenses.

Question 61

Management controls its sales force through the:

A)compensation plan.
B)quota system.
C)territorial structure.
D)training program.
E)All of these.

Question 62

When a company demonstrates satisfactory overall sales and profit figures,then:

A)there is no need for a sales volume analysis.
B)there is no need for a marketing cost analysis.
C)there is no need for a marketing profitability analysis.
D)the 80-20 principle no longer applies.
E)None of these.

Question 63

Which of the following is true about salespeople and SFA?

A)Most SFA systems are so user-friendly that training for reps is not necessary.
B)SFA adds value to an organization only when reps regularly enter data.
C)Relative to management,salespeople tend to be more eager to adopt SFA.
D)SFA provides meaningful information to top management,but not to salespeople.
E)All of these.

Question 64

The sales manager generally reaps the largest possible gain by working with the ______________ segments of the organization.

A)oldest
B)biggest
C)weakest
D)strongest
E)fastest.

Question 65

Typically,_____ percent of the orders,customers,territories,or products contributes about ______ percent of the sales volume or profit.

A)50;50
B)40;60
C)80;20
D)90;10
E)None of these.

Question 66

When put together,a sales volume analysis and a marketing cost analysis constitute:

A)A marketing profitability analysis.
B)A detailed study of the unit sales volume by product line.
C)An examination of marketing expenses associated with each marketing unit.
D)A sales management audit.
E)A marketing audit.

Question 67

The customer probability cube helps predict:

A)How much customers will buy.
B)What products will be purchased.
C)When customers will buy.
D)When the products will be purchased.
E)All of these.

Question 68

All of the following are true about sales force automation (SFA)systems,except:

A)SFA analyzes information from a variety of the firm's different business functions.
B)SFA is typically part of a firm's overall customer relationship management system.
C)SFA makes performance evaluation faster and easier.
D)SFA is so easy that no training of salespeople is required.
E)Most company executives are satisfied with recent implementations of SFA.

Question 69

The three stages of the sales management process are:

A)planning,implementation,and goal setting.
B)planning,strategizing,and evaluation.
C)staffing,organizing,and goal setting.
D)planning,implementation,and evaluation.
E)staffing,operating,comparing.

Question 70

When analyzing sales volume by customers groups,a useful basis for grouping customers is by:

A)Industry divisions (transportation,farm market,manufacturer,etc. ).
B)Channels of distribution (wholesalers,department stores,discount stores,etc. ).
C)Key (national)accounts and other accounts.
D)Any or all of these.
E)Only two of A-B-C are used.

Question 71

If a firm has a total of exactly 10 customers,all of which buy the same amount of product;then instead of an 80-20 principle,it is really a:

A)10-10 principle.
B)30-30 principle.
C)50-50 principle.
D)80-80 principle.
E)Any of these.

Question 72

When analyzing sales volume,sales managers break it down by:

A)sales territory
B)salesperson
C)product
D)customer
E)All of these.

Question 73

The evaluation process - whether it is a complete marketing audit or only an appraisal of individual components of the marketing program - involves:

A)Finding out what happened.
B)Finding out why it happened.
C)Deciding on how to capitalize on favorable conditions.
D)Planning the next period's activities to improve on unsatisfactory conditions.
E)All of these.